Smugglers cash in on Michigan can refund

Michigan lawmakers want to crack down on can and bottle smugglers they say are scamming Michigan for undeserved recycling refunds, corrupting a generous 10-cent per container payback policy once portrayed in a “Seinfeld” episode and which beverage officials claim costs the state millions of dollars annually.

“Seinfeld” characters Kramer and Newman failed miserably in their comedic attempt to cash in on the refund, when they loaded a mail truck full of cans and bottles in New York and attempted to drive them to Michigan. But lawmakers say it’s a serious problem, especially in border counties, and they want to toughen penalties on people who try to return unmarked, out-of-state cans and bottles for refunds.

“If you are intending to defraud ... then you should be held accountable for it,” said Republican Rep. Kenneth Kurtz of Coldwater. He recently introduced legislation aimed at cracking down on scammers who drive car and truck loads of cans from Indiana, Wisconsin and Ohio — states that do not offer refunds — to stores across the border in Michigan.

His legislation would make an attempt to return between 100 and 10,000 nonreturnable containers punishable by up to 93 days in jail and a $1,000 fine. Current law sets penalties only for those who actually return fraudulent containers.

Michigan’s 10-cent-per-container refund — the highest in the country — was enacted more than 30 years ago to encourage recycling. Many say it’s worked. The state’s recycling rate for cans and bottles was nearly 96 percent in 2011. By contrast, New York, one of nine states with nickel deposits on most containers, saw only a 66.8 percent redemption rate in 2007, the most recent figure available.

Despite measures Michigan lawmakers have taken, including tougher penalties for bottle scammers and new machines that kick out fraudulent cans, store owners and distributors along the border say illegal returns persist.

The state loses $10 million to $13 million a year to fraudulent redemptions, according to most recent 2007 estimates from the Michigan Beer and Wine Wholesalers Association.